If people work longer or harder,
a. they are unambiguously worse off
b. living standards will rise but nonmarket activities must be sacrificed
c. living standards will fall
d. more output can be produced, but living standards will fall
e. they will have fewer consumer goods to enjoy
People’s decision about whether to hold money or bonds can be influenced by the
interest rate.
Economists disagree about many things. When those disagreements are about which
model best explains the economy, these disagreements are primarily over “positive”
statements.
Gross Domestic Product (GDP) per capita is
a. GDP in current dollars
b. GDP adjusted for inflation
c. GDP per person
d. GDP per dollar spent
e. GDP per day
Suppose the CPI has been overstating the increase in the cost of living by 1% for 25
years, the total impact of that 25 years later is
a. less than 25%
b. exactly 25%
c. negligible since it is only 1% per year
d. more than 25%
e. 24%
Countercyclical fiscal policy refers to
a. any fiscal policy that cycles between budget surpluses and budget deficits
b. the use of taxes and government spending to keep the economy close to potential
GDP in the short run
c. any fiscal policy that is employed during a business cycle
d. the use of open market purchases of bonds to keep the economy close to potential
GDP in the short run
e. the use of changes in tax rates to keep the economy at potential output in the long
run.
No society can provide its citizens with everything that they want because of
a. greedy politicians
b. lazy workers
c. an educational system that does not provide hands on experience
d. firms that strive to maximize profits
e. a scarcity of resources
The Consumer Price Index (CPI) is an index of the cost of a market basket of goods
purchased by a typical household.
Which of the following is not included in the M1 money stock?
a. money market funds
b. demand deposits
c. checking account deposits
d. travelers’ checks
e. cash in the hands of the public
Real GDP is nominal GDP
a. plus depreciation
b. adjusted for changes in the price level
c. minus depreciation
d. minus taxes
e. minus inflation
If the Fed responds to an increase in government spending with the goal of stable prices
and output, which of the following would be the result?
a. A larger multiplier effect than normal
b. Partial crowding out
c. An increase in consumption and investment spending
d. No crowding out
e. Complete crowding out.
Over the past thirty years in the U.S., increases in labor demand have been __________
than increases in labor supply so that wages on average have __________.
a. smaller; increased
b. larger; increased
c. smaller; decreased
d. larger; decreased
e. larger; stayed constant.
During the current year, Jessica sold her house, built two years ago, to Kim for
$175,000. Kim then sold the house to Dave for $185,000. How much does GDP
increase due to these transactions?
a. $370,000
b. $175,000
c. $185,000
d. $360,000
e. $10,000
Mike is an automobile worker. Because of technological changes in the way
automobiles are produced and the increased use of automation, Mike was recently laid
off and is currently seeking another job. Mike is best described as being
a. frictionally unemployed
b. structurally unemployed
c. seasonally unemployed
d. not in the labor force
e. cyclically unemployed
To be considered employed, a person must have
a. worked at least 1 hour during the previous week
b. searched at least 1 hour for a job during the previous week
c. worked at least 5 hours during the current week
d. worked at least 15 minutes during the previous month
e. earned at least the minimum wage for five or more hours of work per week
Reducing business taxes or providing specific investment incentives can shift the
demand for loanable funds curve
a. rightward, slow the growth of the capital stock, and improve the standard of living
b. rightward, speed the growth of the capital stock, and improve the standard of living
c. leftward, speed the growth of the capital stock, and reduce the standard of living
d. rightward, speed the growth of the capital stock, and reduce the standard of living
e. leftward, slow the growth of the capital stock, and reduce the standard of living
The Federal Reserve
a. issues new government bonds to finance budget deficits
b. issues bonds for the U.S. Treasury
c. buys and sells already-existing bonds
d. increases the money supply by selling bonds
e. raises and lowers tax rates and disburses money for government purchases and
transfer payments
The distinction between positive and normative economics
a. is that positive economics applies only to microeconomic problems
b. is that normative economics applies only to microeconomic problems
c. is the difference between an assumption and a conclusion
d. helps us understand why economists sometimes disagree with one another
e. explains why economics is not a social science